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Aussie coal producers dabbling further in automation

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World Coal,

Australian coal producers have slowly been dipping their feet in the automation pond, albeit not as deep as counterparts within the iron ore sector. Wood Mackenzie's Principal Analyst Brent Spalding has commented the following:

“Over the past decade, the use of autonomous vehicles – including trucks, drills and trains – within the iron ore industry has risen exponentially. The move towards automation has been slow within the coal sector because of disadvantages associated with more complex mining conditions and the high capital spend.

“We saw the first commercial step towards autonomous trucks in the Australian coal sector in July 2018. Whitehaven has agreed with Hitachi to mobilise a fleet of six autonomous trucks at one of its operating pits at Maules Creek in New South Wales by April 2019. If it proves successful, the technology will be introduced throughout the mine.

“In iron ore, we have seen increased productivity levels of 15% to 20% mainly driven by higher output levels. Output levels have increased at autonomous mines because of improved equipment utilisation, less downtime due to fewer shift changes and breaks, and a drop in labour absenteeism. Safety has also proven to be a key driver of automation. To date, there have been no injuries attributed to autonomous vehicles within the Australian iron ore sector.

“A significant capital component is associated with automation. For iron ore, we estimate no real change in net present value across automated and non-automated sites, because the operating cost savings are presently offset by the high capital spend. We estimate an autonomous retrofit in the order of US$500 000 per truck. But we would expect capital spend to fall as access to automation technology improves and becomes more readily available. Added productivity improvements will also lead to further cost savings.

“We ran a scenario for coal to estimate what cost savings could be achieved if we assume a 15% or 20% improvement in unit rates (excluding diesel) for truck haulage and the same increase in labour productivity. The analysis is based on an average surface coal mine operating at the mid-point of the Australian cost curve. We assume a surface coal mine with a strip ratio of 6.5 billion m3 per raw t, producing 10 million tpy of raw coal with a productivity of 13 333 raw t per employee. When adjusting at 15%, we estimate a decline in raw total cash costs of 10% (or US$2.69/t) to U$25.44/t. At 20%, we estimate costs 12% lower at US$24.66/t. It is worth noting that raw costs do not take into account processing yields.

“In this Australian coal scenario, the total labour component accounts for close to one-third of the total raw unit cost. However, for the 15% and 20% productivity improvement scenarios, we estimate that the labour component will account for more than 60% of the total cost saving. So it stresses that if labour is not reduced – or output increased – as part of the automation process, cost savings will be limited to approximately US$1/t for both scenarios.

“Beyond 2025, there could be more opportunities for driverless trucks through the development of some larger projects in excess of 20 million tpy, which include Glencore's Wandoan coal project in the Surat basin and Adani's Carmichael in the Galilee basin. These greenfield projects could be more viable because they represent a clean slate, where the mine plan can be geared towards automation from the start, rather than be retrofitted or changed as the mine develops. There could even be a further option for driverless trains given the rail infrastructure still needs to be developed for these Queensland coal basins.

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